Question 119
Kiran deposited Rs 50000 in a bank at a simple interest rate of 20% for 3 years. How much more interest would she have accrued if she were to deposit the same amount at the same interest rate for the same period at compound interest?
Solution
Interest at simple interest = P X r X t/100 = (50000 X 20 X 3)/100 = Rs 30000
Interest at compound interest = $$P[(1+\frac{r}{100})^n - 1] = 50000[(1.2)^3 - 1] = 36400$$
So, the difference is Rs 6400.
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